Income Tax Slab Rates AY 2026-27 (FY 2025-26) — New vs Old Regime, Rebate, Surcharge & Marginal Relief

1New regime slab rates for AY 2026-27 (the default)

Since the Finance Act 2023 the new regime under section 115BAC is the default. You are taxed under it automatically unless you actively opt for the old regime. For AY 2026-27 the rates apply identically to every individual regardless of age — unlike the old regime, the new regime gives senior and super-senior citizens no higher exemption limit.

2New regime slabs — income bands and rates

• Up to ₹4,00,000 — Nil
• ₹4,00,001 to ₹8,00,000 — 5% (tax of ₹20,000 at the top of this band)
• ₹8,00,001 to ₹12,00,000 — 10% (cumulative ₹60,000)
• ₹12,00,001 to ₹16,00,000 — 15% (cumulative ₹1,20,000)
• ₹16,00,001 to ₹20,00,000 — 20% (cumulative ₹2,00,000)
• ₹20,00,001 to ₹24,00,000 — 25% (cumulative ₹3,00,000)
• Above ₹24,00,000 — 30%

3Old regime slab rates — and why age still matters

The old regime keeps the ₹2,50,000 basic exemption and the three-rate structure, but raises the exemption for older taxpayers. It remains available to anyone who opts out of the default, and for taxpayers with large deductions it can still win — the old vs new regime calculator settles it for your own numbers in a few seconds.

For those under 60: nil up to ₹2,50,000; 5% from ₹2,50,001 to ₹5,00,000; 20% from ₹5,00,001 to ₹10,00,000; 30% above ₹10,00,000.

For senior citizens aged 60 to 80, the nil band runs to ₹3,00,000. For super-senior citizens aged 80 and above it runs to ₹5,00,000, after which 20% applies up to ₹10,00,000 and 30% beyond. This age-based relief has no equivalent in the new regime, which is one reason older taxpayers with modest incomes sometimes stay with the old regime. If you are weighing the deductions that make the old regime worth keeping, the Section 80C comparison covers what each instrument actually returns.

4Who the ₹12,00,000 rebate does not reach

Almost every write-up says income up to ₹12,00,000 is tax-free and stops there. The rebate under Section 87A is available to a resident individual — and each of those three words excludes somebody.

If you are a non-resident, you do not get it. An NRI with ₹11,00,000 of Indian taxable income pays slab tax on it in full, where a resident with the identical income pays nothing. This is the single most expensive assumption on this page, because the return looks correct right up to the point where the rebate silently fails to apply.

A Hindu Undivided Family does not get it either, because the section speaks of an individual and a HUF is a separate kind of assessee. Nor does a firm, an LLP or a company — they are taxed under their own rates entirely, not on these slabs.

• Resident individual — full rebate, so nil tax up to ₹12,00,000 taxable.
• Non-resident individual — no rebate, slab tax from the first rupee above the basic exemption.
• HUF — no rebate; the slabs apply but the relief does not.
• Firm, LLP or company — different rate structure altogether, not these slabs.

5NRIs — the same slabs, two reliefs missing

A non-resident is taxed on Indian-sourced income at exactly the slab rates above. What changes is not the rates but the reliefs sitting on top of them, and both of the ones that matter most are unavailable.

There is no Section 87A rebate, as above. And the higher basic exemption for age does not apply either: a resident aged 65 gets a ₹3,00,000 exemption under the old regime, while a non-resident of the same age gets ₹2,50,000. Age relief is written for resident senior citizens, so residency decides it, not the birth date.

The practical effect is that the old regime rarely helps an NRI in the way it helps a resident of the same age, and the comparison has to be run on the actual figures rather than assumed from a rule of thumb built for residents.

6HUFs — a separate taxpayer with its own slab

A Hindu Undivided Family is assessed as its own person, with its own PAN and its own return. It runs through the same slab table as an individual and gets the same basic exemption, but no age-based relief — a HUF has no age — and no Section 87A rebate.

Where a HUF genuinely helps is that income properly belonging to the family is taxed in the family's hands rather than added to any one member's, so a second basic exemption and a second run up the slabs comes into play. Income that is really an individual's cannot be moved into the HUF to achieve that, and doing so invites the clubbing provisions rather than a saving.

7Women — there has been no separate slab since 2012

This is still one of the most searched questions on Indian income tax, and the answer has been the same for over a decade: there is no separate slab for women. Finance Act 2012 removed the distinction with effect from AY 2013-14, and every rate on this page applies identically regardless of gender.

Any page still showing a women-specific slab table is reproducing something that stopped being law before most of today's taxpayers started filing. What does still vary is residency and age, which is why those get their own sections above and this one does not.

8Standard deduction — where ₹12,75,000 comes from

The new regime gives salaried taxpayers and pensioners a standard deduction of ₹75,000; the old regime gives ₹50,000. This is subtracted from gross salary before the slabs are applied, which is why the widely quoted figures differ.

The ₹12,00,000 threshold everyone cites is a threshold on taxable income, not on salary. A salaried person with ₹12,75,000 gross arrives at ₹12,00,000 taxable after the ₹75,000 standard deduction, and therefore pays nothing. Someone with ₹12,75,000 of business or freelance income gets no standard deduction, lands at ₹12,75,000 taxable, and does owe tax. The same headline number means different things depending on how you earn.

9Section 87A rebate — the ₹12,00,000 threshold

Under the new regime the section 87A rebate is up to ₹60,000 where taxable income does not exceed ₹12,00,000. The slab tax at exactly ₹12,00,000 is ₹60,000, so the rebate wipes it out entirely and the tax is nil. That is the whole mechanism behind the no-tax-up-to-₹12-lakh headline: the slabs still charge tax, and the rebate then cancels it.

Under the old regime the rebate is up to ₹12,500 where taxable income does not exceed ₹5,00,000, making ₹5,00,000 the effective nil point there.

One important limit: the rebate does not apply to income taxed at special rates, such as long-term capital gains under section 112A. If part of your income is capital gains, that part is taxed on its own terms and the rebate will not shelter it, even if your total stays under ₹12,00,000.

10Marginal relief — the rule most calculators get wrong

Read the rebate rule literally and it produces an absurdity. At ₹12,00,000 taxable the tax is nil. At ₹12,00,001 the rebate vanishes, the full ₹60,000 of slab tax revives, and with cess the bill is ₹62,400. One extra rupee of income would cost ₹62,400 of tax.

Marginal relief, introduced for the new regime by the Finance Act 2025, exists to prevent exactly that. It caps the tax at the amount of income earned above ₹12,00,000, so the extra tax can never exceed the extra income.

The Income Tax Department's own illustration: at a total income of ₹12,10,000 the tax works out to ₹61,500 before relief. Marginal relief limits it to ₹10,000 — the amount above the threshold — and 4% cess brings the payable figure to ₹10,400.

The relief stops mattering at about ₹12,70,588, the point where ordinary slab tax falls below the excess over ₹12,00,000. Above that the normal computation is already the lower number and relief simply has nothing to do.

11Surcharge — the layer above ₹50,00,000

Surcharge is charged on the income tax itself, not on income, and only once total income crosses ₹50,00,000. It is nil up to ₹50,00,000, then 10% above ₹50,00,000, 15% above ₹1,00,00,000 and 25% above ₹2,00,00,000.

The regimes diverge at the top. The old regime carries a 37% band above ₹5,00,00,000; under section 115BAC(1A) that band does not apply, so the new regime is capped at 25%. For very high earners this cap is one of the new regime's largest advantages.

Where the income includes dividends or capital gains, the surcharge on that portion is restricted to 15% regardless of the band.

12Marginal relief on surcharge works the same way

Each surcharge threshold would create its own cliff without relief. Crossing ₹50,00,000 by a single rupee would add 10% surcharge on the entire tax — roughly ₹1,08,000 — for one rupee of income.

So relief applies at every threshold: total tax plus surcharge cannot exceed what a person exactly at the threshold pays, plus every rupee earned above it.

At ₹51,00,000 taxable under the new regime, the slab tax is ₹11,10,000 and a 10% surcharge would make it ₹12,21,000. But a person at exactly ₹50,00,000 pays ₹10,80,000, and the excess income is ₹1,00,000, so the cap is ₹11,80,000. Add 4% cess and the payable figure is ₹12,27,200.

A consequence worth understanding: inside a relief zone your marginal rate is about 104%, because the relief caps the income tax at the excess and cess is then charged on top of that capped figure. It feels wrong, but it is the correct outcome and far better than the cliff it replaces.

13Cess — the last 4%

Health and education cess of 4% is applied at the very end, on income tax plus surcharge after any marginal relief. It is not a slab and there is no exemption from it. Every rupee figure quoted as final in this guide already includes it: ₹1,20,000 of slab tax at ₹16,00,000 becomes ₹1,24,800 payable.

14Worked examples across the range (new regime, taxable income)

• ₹12,00,000 — slab tax ₹60,000, rebate ₹60,000, tax NIL
• ₹12,10,000 — slab tax ₹61,500, marginal relief caps it at ₹10,000, plus cess = ₹10,400
• ₹16,00,000 — slab tax ₹1,20,000, no rebate, plus cess = ₹1,24,800
• ₹30,00,000 — slab tax ₹4,80,000, plus cess = ₹4,99,200
• ₹50,00,000 — slab tax ₹10,80,000, still no surcharge, plus cess = ₹11,23,200
• ₹51,00,000 — surcharge applies but marginal relief caps tax at ₹11,80,000, plus cess = ₹12,27,200
• ₹60,00,000 — slab tax ₹13,80,000 plus 10% surcharge ₹1,38,000, plus cess = ₹15,78,720 (check your own figure in the income tax calculator)

15What the new regime takes away

The lower rates are paid for by giving up most deductions. Under the new regime you cannot claim section 80C investments, 80D health insurance premiums, HRA exemption, LTA, the section 24(b) interest deduction on a self-occupied home, or most of Chapter VI-A.

What survives is narrow but real: the ₹75,000 standard deduction, the employer's NPS contribution under section 80CCD(2), and section 24(b) interest on a let-out property.

This is the whole basis of the comparison. The new regime wins by default for anyone without substantial deductions. The old regime wins when 80C, 80D, HRA and home-loan interest together are large enough to outweigh the rate difference — often around ₹3,50,000 to ₹4,00,000 of total deductions, though the exact crossover depends on your numbers.

16Common mistakes we see

• Applying the ₹12,00,000 threshold to gross salary instead of taxable income — the ₹75,000 standard deduction sits in between
• Assuming ₹12,75,000 is tax-free for everyone; it is a salaried figure, and freelancers and business owners get no standard deduction
• Expecting the 87A rebate to shelter capital gains — it does not apply to special-rate income
• Believing a rupee over ₹12,00,000 costs ₹62,400; marginal relief prevents that
• Forgetting that surcharge is charged on the tax, not on income
• Choosing a regime once and never revisiting it — a salaried taxpayer may switch each year
• Ignoring the 4% cess when budgeting for the final payment

17Which regime should you pick

There is no universal answer, only arithmetic. Add up everything you can genuinely claim under the old regime — 80C, 80D, HRA, home-loan interest, and the ₹50,000 standard deduction — and compare the resulting tax with the new regime figure on the same income.

A salaried taxpayer can switch between regimes each year at the time of filing, so the decision is not permanent. Someone with business or professional income faces a stricter rule: once you opt out of the new regime you may return to it only once, so the choice deserves more care.

Our free calculator runs both regimes side by side for AY 2026-27, including the rebate, marginal relief, surcharge and cess described above.

If you want this settled against your own payslip rather than a worked example, the old vs new regime calculator applies both sets of rules to the same numbers, and the take-home salary breakup shows what actually reaches your account. If you are already past the filing date, the belated return guide covers what is still open to you.